With Steve Mnuchin’s Senate confirmation Monday night, a White House battle is staged.
Mnuchin will be in the Treasury building on the Great Mall and National Economic Council director, Gary Cohn will be at the head of the mall at the White House.
While both men come from Goldman Sachs, Mnuchin is second generation banker as his father was with the white shoe investment shop for many years. Cohn was the second in charge of the bank but was never able to take the reins as chief Lloyd Blankfein hung tough during the Great Recession.
The position of National Economic Council director is the back up Treasury spot since it was developed in the Clinton administration for ex-Goldman honcho Bob Rubin.
Who will play what role is speculation right now, but if I had a guess, look for Cohn to have a greater purpose to provide Wall Street banks with greater flexibility in capital formation by gutting Dodd/Frank. Bringing back proprietary trading is probably his main objective, since it provided Goldman and others with a healthy revenue stream for the banks allowing for greater bonuses.
Mnuchin’s positions probably includes freeing up the housing market to unlock billions in value in the mortgage market. So look for him to be a backer of Fannie Mae and Freddie Mac in backing the home loan market. Since Mnuchin came out of the mortgage mess, he may have a strong belief that mortgages, like student loan obligations should be an unforgivable debt.
Needless to say neither have a greater purpose to directly benefit Main Street or the general economy in my view.
I spoke with a Washington DC legislative analyst Monday and what he told me was quite an eye opener. The proposed Trump tax cut will probably not come through this year due to constraints in the legislative calendar. Yes the White House will speak in generalities on the new policy, but cannot get the Senate of House to act on it this year due to budgetary constraints in Congress’ scheduling.